Illegal brothel owners likely to evade jail

By Adam Cooper

July 16, 2013 — 5.11pm

A woman alleged to be a key figure in Melbourne's illegal sex industry and her former business partner are likely to be spared jail despite pleading guilty to running unlicensed brothels and bribing a council official.

Xue Di Yan, 51, who investigators believe ran a multimillion-dollar prostitution racket for more than a decade, pleaded guilty on Tuesday to running illegal brothels in Richmond, Fitzroy North and Burnley between August 2008 and November 2010.

She also pleaded guilty to one charge of bribing a public official, in that she paid a former high-ranking officer from the City of Yarra $23,500 in return for tip-offs about looming inspections by council officers, police or government agencies.

Yan's then-business partner, Anton Lu, also pleaded guilty to bribing a public official and to running brothels in Richmond and Fitzroy North without a licence.

The County Court heard Lu, 52, had assisted the prosecution in the case and had agreed to provide evidence against Yan if required.

The court heard Lu and Yan paid the council officer $500 cash a month in return for information about council and police operations targeting brothels, and that Yan recorded the payments in exercise books under the listing "council $500".

Prosecutor Susan Borg said on one occasion the council officer prevented the business' illegal activities being discovered by authorities when he told Lu of inspections that were to be conducted that day by immigration and consumer affairs officials.

"[The council officer] was paid $500 cash per month to pass on any information to Lu about any council or police operations," Ms Borg said.

"Yan was happy for [the officer] to be paid so long as they stayed in business."

The former council officer, whose name has been suppressed, has just completed a 20-month jail term after pleading guilty to accepting bribes from brothel owners.

But Yan and Lu are likely to be spared jail time.

Ms Borg told Judge David Parsons the prosecution favoured wholly suspended jail terms to be imposed, and for Yan to also be fined a significant amount of money.

The court heard the brothels operated as massage parlours, but that Yan and Lu knew some of the women working there were providing sexual services to customers.

Ms Borg said the pair made a "significant" profit from the brothels, which they split 50-50.

The court was told the council official told Lu in 2006 of his previous career in the police and his good relationship with police officers, but that he began taking regular bribes from 2008.

The man, who resigned from the City of Yarra when his office was raided in November 2010, was last year jailed for taking $130,000 in bribes over an eight-year period from the operators of illegal brothels across Melbourne. He took the money to fuel a gambling habit.

In 2011 The Age revealed that police targeting multimillion-dollar prostitution rackets and human trafficking in Melbourne's inner north had uncovered at least 20 illegal brothels, mostly operated by Chinese crime syndicates.

After reports in The Age, the state government moved to overhaul the way Victoria's sex industry – which was estimated to include up to 300 illegal brothels – was overseen and policed.

Yan, who told the court on Tuesday that she now worked as a kitchen hand in a Melbourne dumpling shop, and Lu, of Fitzroy North, were bailed to appear before court on Wednesday for a continuation of their plea hearings.